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What is Government E-Marketplace (GeM)? How Does it Works and What are its Benefits?

What is Government E-Marketplace (GeM)? How Does it Works and What are its Benefits?

Published on 23 December 2022 .Views 29 .Comments 0
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In this article, we will be discussing an interesting institution that can be considered a dark horse, which has been performing exceptionally well in the last 2 years. So, let’s see what is this institution, what it does, and what more in this e-marketplace in this article as we move forward.

What is Government E-Marketplace:

  • The government e-marketplace, also known as GeM, is an online platform that enables government organizations in India to procure goods and services from registered sellers efficiently and transparently.
  • The platform was launched in 2016. The GeM is managed by the Ministry of Commerce and Industry and is open to all government departments, agencies, and public sector units.
  • The government of India is an online platform where the procurement of goods and services for various government departments, organizations, and Public Sector Undertakings (PSUs).
  • Earlier the procurement of goods and services by various departments of the government was lengthy and complex, and hence Government has set up this platform to ease down this process. This GeM also facilitates several facilities like e-bidding, reverse auction, demand aggregation, etc.
  • The concept of GeM is not new to the world. The United States of America (USA) has already launched US General Service Administration, while South Korea has initiated an Online e-procurement facility for the same purpose.

Purpose of GeM:

  • To simplify the procurement process
  • Reducing corruption by promoting fair competition and making it easier for small businesses to access government contracts.
  • To ensure transparency in the decision-making and free of malpractices in the procurement of goods and services.

How does GeM Works?

1) Process of Invitation of bids:

  • To provide equal opportunities for the procurement of goods and services, the government use to invite the bidders via physical mode.
  • But via GeM, the seller needs to create their profile, and the government will notify the need for particular products and services & will invite bids for the same. Here, the bidder simply needs to register and apply for the bid.

2) Public Procurement Policy:

  • Earlier, different government departments were having different procurement policies, and hence there was much redundancy leading to the wastage of resources as well.
  • The creation of GeM has eliminated this drawback and has provided a unified platform for all the departments of the government.

3) Method of the procurement:

  • Before the launch of GeM, there was purely physical paperwork and hence all the methods were conducted via physical mode. But, thanks to digitization in the economy, this method turned digital.

4) Method of Negotiation and Deliberation:

  • Earlier, the parties, sellers, or individual sellers who were having contact with the government departments used to get some power during the period of negotiation and deliberation. But with the online mode, the power of negotiation got loose, and the party with the best bid will only get the contract.

5) Entry Barriers:

  • In the traditional method, there were several entry barriers as earlier every seller does not have equal opportunities, but via GeM, every seller has the equal opportunity to participate in the process.

Importance of GeM:

  • A benefit to small-scale enterprises
  • A benefit of self-help groups
  • A benefit to the Start-Up
  • A benefit of to Make In India Initiative

Benefits of GeM:

  • Increased Public Savings: Government will own the power of selecting the lower bid
  • Atmanirbhar Bharat Vision
  • Push towards vocal for local
  • Efficient and effective procurement system
  • Enabling MSME to scale-up
  • Public Procurement Process delivery on schedule
  • Future expansions

Financials:

  • Sellers on GeM have increased from 0.87 lakh in FY18 to 13.96 lakh in FY21 and 40.02 lakhs in FY22.
  • Whereas buyers on GeM rose from 0.21 lakhs in FY18 to 0.59 lakhs in FY22.
  • Orders Volume was just 3.73 lakhs during FY18 which has increased every year and stands at 33.17 lakhs in FY22. As of FY22, 54.74 lakhs are available on GeM.
  • The Annual GMV on GeM was rising gradually between FY18-FY21 from Rs. 0.06 Lakh Cr. in FY18 to Rs. 0.39 Lakh Cr. in FY21. The Annual GMV on GeM has witnessed 2.5x growth during FY22 and has reached Rs. 1.07 lakh Cr.
  • Government E-Marketplace recorded Gross Merchandise Value (GMV) of around $14.2 billion against $17 billion and $23 billion of Amazon and Flipkart respectively.

What Should Individuals Do:

CEO of GeM Mr. Prashant Kumar Singh has given a target of surpassing the GMV of Amazon and Flipkart and touched a milestone level of $25 billion. GeM has been already performing well and with such a significant vision for the period ahead, the future looks good for GeM.

Disclaimer: The information here is provided for reference purposes only and should not be misconstrued as investment advice. Under no circumstances does this information represent are commendation to buy or sell stocks or MF.
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